TYPE OF FINANCIAL ISLAMIC

Next, moving to the type of Islamic financing mode, there are three categories of Islamic financial
instruments. Based on debt or trade products such as Murabahah, Musawamah, Salam, and Istisna.
While for Equity-based products such as Musharakah and Mudarabah and finally half-debt-based such
as Ijarah. These equity-based products are more about shared profits based on real income because
they are more risky than the other two categories as above, and they prioritize things based in Islamic
shariah.

There are six different categories of Islamic banking. Firstly Murabahah. It is a form of bank purchase
agreement or financing on the client's behalf. The buyer must use the asset they acquired and
consent to delayed payments. Therefore, the client must guarantee the bank a specific profit.
Following the payment of the price, the bank will then transfer the entire selection to the customer.

Second is an Ijarah leasing agreement, in which the bank purchases real estate or capital items like
machinery and equipment and leases them to clients. After that, either the client pays rent to the
bank or the bank makes an investment in the company and gets a cut of the profits.

The third Istisnaa is identical to Murabaha, with the exception that the consumer will only be
permitted to use the property that the bank has purchased upon complete payment of the charge.
The bank gets a portion of the customer's profit in this situation as well.

Next Mudarabah. Investors who enter into a mudarabah contract must divulge their plans to the
bank. The bank will then review the plan to ensure that it is identical and in accordance with sharia.
The bank will provide funds if the proposal is authorised. A Mudarabah charge is included in the
investment's earnings that is paid to the bank.

As opposed to Musharakah, which is a contract in which the bank accepts a joint venture with its
clients. They must first collaborate and raise money together. They can then collaborate and split
profits according to a set ratio. Before doing business with a client, banks typically check to see if the
business complies with Islamic law.

Last but not least is Tawarruq, which is also a sort of contract in which the consumer approaches the
bank to make a purchase and buy real estate from the bank. Tawarruq is frequently compared to a
reverse Murabah. The client can then purchase a product from the bank, utilise it, and then resell it to
the bank. The bank can then sell it back to the vendor ahead of schedule.

3.0 OBJECTIVE
There are three main objectives to be discussed in this paperwork namely:
1.To explain the history and concept of Islamic financial.
2.To discuss the regulatory and legal frameworks of Islamic financial.
3.To relate the issues of Islamic Financial and challenges regarding the issues.

4.0 RESEARCH METHODOLOGY

The qualitative method is employed in this study, which is a thorough investigation of the topic to get
in-depth insight and comprehension. This study made use of a document analysis tool that includes a
step-by-step technique for collecting data from documented and recorded primary sources such as
journals, articles, and course materials. Journal articles contain intellectual analyses, conceptual
frameworks, and empirical research conducted by experts in their fields. These publications have
undergone extensive peer assessment, ensuring the accuracy and trustworthiness of the data. To
reach the research goal, this study investigates the process of gathering, analysing, and using relevant
information before developing and expressing views. Furthermore, internet resources such as online
databases, research repositories, and finding websites provide access to a wide range of content,
including reports, case studies, and qualitative study findings. By mixing journal articles and web
resources, researchers can get several perspectives, corroborate findings, and develop a full
understanding of the subject issue.